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Well, Well: Employers Tie Health Care Financial Incentives to Specific Outcomes

Many companies offer incentives and tie them to plan design, specific health outcomes or apply surcharges when employees don't take part in particular programs.

September 29, 2012
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Related Topics: Top Stories - Frontpage, Health Care Costs, Benefit Design and Communication, Health and Wellness, Health Care Benefits, Benefits
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After Confluence Technologies Inc., a Pittsburgh-based manufacturer of software products for the financial services industry, introduced its wellness incentives program, the company found it was a big hit—with those who were already physically active.

Now it's taking a different tack, tying health insurance deductibles and copayments to participation in various wellness activities, such as filling out a health questionnaire and taking part in a biometric screening.

"By tying incentives to plan design rather than simply physical activity levels, we have seen an increase in participation across the board," says Janis Shaw, Confluence's vice president of people.

That mirrors a growing trend among employers to not just offer incentives but tie them to specific health outcomes or apply surcharges when employees don't take part in particular programs.

Of the 82 large employers that responded to a survey released in August by the National Business Group on Health in Washington, almost half use financial incentives to encourage employees to participate in wellness programs; about 30 percent link them to specific outcomes, such as attaining a certain body mass index or cholesterol level; and 22 percent levy surcharges on those who snub certain programs.

In its 2011 survey, of the 83 large employers that responded, 30 percent tied incentives to certain outcomes, while 12 percent leveled surcharges.

LuAnn Heinen, vice president of the National Business Group on Health, says employers have turned to incentives because "engagement is problematic. It's not just, 'If you build it, they will come.' "

To encourage participation, employers continue to up the financial ante. The 2012 survey found that for those employers that offer incentives, the median amount employees can receive is expected to soar from $300 this year to $450 in 2013.

The big deterrents to participation are a lack of time, energy and interest, a 2012 survey of 400 employers by OptumHealth found.

Of the organizations surveyed by OptumHealth, more than 70 percent offered incentives for employees to have biometric screenings or health risk assessments.

"Those are foundational pieces to help people improve their health," says Seth Serxner, senior vice president and chief health officer at OptumHealth.

But even with incentives, participation in wellness programs can be affected by such things as the amount of the incentive, how well the program is communicated and the corporate culture, Serxner says. An engaged leadership and peer champions can help drive participation, particularly compared to a company that pays lip service to wellness, and then does nothing to foster it.

When Confluence enacted its wellness incentives program in 2009, it discovered its program appealed to those who were already physically active, "but unintentionally excluded the less-active portion of our employee population," Shaw says.

Now employees earn points for such activities as answering a health questionnaire and undergoing the biometric screening; participating in stress reduction, smoking cessation and weight-loss management programs; getting annual physical and dental exams and a cancer screening; taking part in such activities as aerobics, walking and running; wearing a seat belt while in a car; and even for getting a massage.

"The incentives help the less active begin paying more attention to their health," Shaw says.

The incentive system has contributed to a 13 percent reduction in health insurance premiums in 2012 for the company's150 employees, Shaw says. By getting biometric screening results, employees have been able to take measures to nip possible health problems in the bud.

And Confluence is making it even more appealing for employees to take part.

It's one of those rare companies that hasn't required employees to pay an insurance deductible. But things will shift in 2013, as employees who don't complete the health questionnaire, do the biometric screening and chalk up at least 350 points in a year will have to pay a deductible and a higher copayment for medical services, Shaw says.

Those with the highest level of insurance coverage will have to pay a $500 individual deductible or $1,000 family deductible for in-network services, Shaw says, and pay a $20 copayment when visiting a doctor for an illness or injury.

Those who rack up enough points won't have to pay a deductible and will have only a $10 copay. They also are eligible for gift cards of up to $200.

The payoff for Confluence comes not only from reduced health insurance premiums, but also from the culture it fosters. Employees recommend their friends for job openings, decreasing recruiting costs.

And a healthier workforce means lower stress and less absenteeism, Shaw says. "We're providing a good, healthy environment for everybody."

Susan Ladika is a writer based in Tampa, Florida. Comment below or email editors@workforce.com.

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